Global trade declined in most sectors last year, except for pharmaceuticals, transportation equipment and road vehicles, the UN Conference on Trade and Development (UNCTAD) said in a recent report. Among the sectors where the value of trade declined by more than 10 per cent last year are apparel, textiles and chemicals.

With a marked shift in global trade along geopolitical lines and a major supply chain reset following the COVID-19 pandemic and the Russia-Ukraine war, India’s trade reliance on China and the European Union (EU) has risen by an estimated 1.2 per cent, the report showed.

This occurred despite India’s efforts to cut reliance on China through the production-linked incentive scheme and quality control orders to check the entry of cheap Chinese items.

India’s trade reliance on Saudi Arabia fell by 0.6 per cent.

UNCTAD estimates a major shift in trade due to the Russia-Ukraine war. While Russia’s trade dependence on China rose by 7.1 per cent, its reliance on the European Union (EU) decreased by 5.3 per cent—a result of Russian oil shifting from the EU to China and India.

China’s two-way trade with Russia last year had hit $240 billion, Chinese customs data showed. Russia had also increased purchasing Chinese goods when major US and EU companies started exiting Russia after the war.

“During the last two years, the geographical proximity of international trade has remained relatively constant, showing minimal nearshoring or far-shoring trends. However, since the latter part of 2022, there has been a noticeable rise in the political proximity of trade,” the UNCTAD report said.

“This indicates that bilateral trade patterns have been favouring trade between countries with similar geopolitical stances. Concurrently, there has been an increasing concentration of global trade to favour major trade relationships, although this trend has softened in the last quarter of 2023,” it noted.

The United States, however, managed to cut reliance on China by 1.2 per cent last year and raise its trade dependence on the EU and Mexico.

Fibre2Fashion News Desk (DS)

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